With help from MTEC SmartZone, startups breathe new life into Houghton-Hancock's economy

With help from development-focused organizations, the Houghton-Hancock area is poised for an economic resurgence.
The economic history of the Houghton-Hancock area is intimately bound up with its landscape. The Quincy Mine's tower is visible for miles atop Mont Ripley, and the area to its north bears the scars of a century's worth of copper mining. Across the Keweenaw Waterway, which itself is a powerful reminder of the region's past as a shipping hub, the blocky buildings of Michigan Tech churn out patents and future innovators like few other institutions in the state.

The Copper Country isn't content to rest on its laurels, though. The mines might be closed for good--occasional proposals for limited reopenings notwithstanding--but a new generation of innovators is in the process of reinvigorating and diversifying the local economy. Let's take a look at what's next for Houghton and Hancock. 

A Proud Tradition of Entrepreneurship and Innovation
While it's impossible to deny the Copper Country was built on a foundation of, well, copper, it's important not to shortchange the contributions of innovators whose work has little or nothing to do with the malleable metal. As it turns out, the Houghton-Hancock area has been minting innovative technologies for years. 

For the past 20 years, family-owned Everblade has churned out heated, commercial-grade wiper blades for use in the world's toughest climates (yes, even tougher than here). Recently, the company has noticed an uptick in interest from private vehicle owners, hinting at a major opportunity for future growth.

Meanwhile, the pace of innovation appears to be accelerating at Michigan Tech. Students and researchers there have churned out a number of promising, potentially disruptive technologies in recent years, including 3D printers that can process metal and next-generation prosthetic limb attachments.

Michigan Tech's bustling laboratories aren't its only sources of new materials and processes. Under the confident leadership of CEO Marilyn Clark, MTEC SmartZone--a business incubation partnership between the state and the university--has emerged as the most successful of Michigan's 15 state-sponsored incubators. Its claim of more than 400 jobs created over the past decade is impressive enough, but its brightest days may still be ahead.

Support, Feedback and Growth
Even the smartest, most driven entrepreneurs--including those who have access to Michigan Tech's state-of-the-art lab spaces--can't bring truly game-changing products to market on their own. With ample space for businesses at every stage of the startup process, SmartZone is a superior alternative to a budding businessperson's garage or home office. It's also a full-service support organization that leverages its strategic partnership with the university and the considerable talents of established local business owners to set enthusiastic innovators up for success.

SmartZone maintains four complementary support programs for technology-focused businesses of various sizes. The organization's signature incubator provides revenue-generating businesses with physical space at SmartZone's Houghton facility as well as practical support and feedback that owners can use to grow sales and build a profile. Once they've developed a stable client base and sales momentum, companies "graduate" from the incubator and move into spaces of their own. 

Meanwhile, SmartZone's "established business" services focus on the needs of "second-stage" companies with least $1 million in revenues or more than 10 employees. These firms don't have to rent space at the incubator, although it's an option. In recent years, SmartZone has worked hard to develop its "Fortune 500 model"--its third prong--for an exclusive group of large clients that need to outsource specialized, project-oriented work. 

Last but not least is SmartStart, a "pre-incubation" process that offers business coaching and marketing classes to help budding entrepreneurs identify marketable products and develop sustainable business plans. SmartStart's centerpiece is an intensive, eight-class course that meets at SmartZone's headquarters on Thursday evenings. Many attendees are Michigan Tech researchers or private tinkerers who don't really understand the business development process--and that's okay, says program director Julie Melchiori.

"SmartStart helps entrepreneurs discover and articulate the business value of their ideas," she says. "We want founders to understand that they can't do everything themselves--they need a supportive team around them." In fact, Melchiori encourages SmartStart participants to bring anyone--research assistants, potential investors, even outsiders with an understanding of their work--who might be able to offer insight and support during the pre-incubation process. In specific instances, she can call on outside business consultants who have experience in a particular subsector.

SmartStart doesn't provide much in the way of material support; it's mostly about "teaching participants to fish" in the often cutthroat world of tech startups. The pre-incubator's entrepreneurs learn how to pitch to potential investors and partners who lack technical knowledge of their work, market to the purchasing managers or consumers who will ultimately purchase their products, and anticipate future challenges. 

Perhaps most importantly, Melchiori aims to reach inventors before they've spent lots of their own resources on bringing a product to market. Many new ideas and inventions, no matter how technologically advanced or novel, are "solutions in search of a problem," she says. "We hope to catch [entrepreneurs] before they've spent time writing a business plan." By teaching inventors when to let a questionable idea go, SmartStart keeps the Copper Country's sharpest minds from diverting precious resources to a lost cause--and, hopefully, teaches them how to sort the marketable from the merely clever.

A Homegrown Success Story
SmartZone has spawned some pretty big fish, too. Since spinning off from SmartZone in 2001, Houghton-based GS Engineering--which engages in the "development and optimization of lightweight structures, correlation of analysis and simulation to test data, and systems integration for ground vehicles and aircraft," according to its website--has hired about 60 employees and secured high-value contracts with the U.S. military and other organizations. As a military contractor, much of its work is kept tightly under wraps, but the firm plays in the same space as much larger conglomerates like GE, General Dynamics and United Technologies.

It's also part of GreenForces, a six-member consortium of U.P.-based aerospace and defense contractors made up of five private firms and Michigan Tech. Despite the decommissioning of much of the region's Cold War-era military infrastructure, GreenForces is positioning the western half of the U.P. as a high-tech "aerospace cluster," says GS Engineering VP Chris Coxon. The Copper Country's geographic isolation hasn't yet affected GS's growth prospects, and Coxon doesn't expect it to in the future. The company has hired two employees in the past quarter and is in the process of interviewing to fill another position.

"Because of technology, this is now a globalized industry," says Coxon. "We perform testing for a variety of clients right at [the Keweenaw Research Center's] winter test track."

The Next Big Things
It took GS more than a decade to reach its present size; no one expects local entrepreneurs to walk out of SmartStart on Thursday evening and hire 50 employees on Friday. For business owners with marketable products and executable business plans, SmartZone's "primary" incubator offers a host of material support and guidance. This involves "a methodical review of all business plan areas along with updated plans, objectives and milestones," according to the organization's website. Prospects are required to submit a basic business plan and financials before beginning work with the incubator.

SmartZone has graduated an eclectic mix of promising, technology-driven companies. Take Lasalle Technology Group, a Houghton-based firm that develops and deploys customizable automation systems for financial firms that trade huge volumes of stocks, currencies, commodities and other financial instruments. When he talks about technology's game-changing power to bring markets to the U.P.'s doorstep, GS's Coxon could easily be channeling LTG: From its perch in Houghton, and with a limited staff, the company has forged relationships with traders and financial firms on all six continents.

Meanwhile, Endres Machining Innovations has a slew of patents pending for various high-tech products and processes, all developed at its Houghton facility. The SmartZone graduate's Micro-Quantity Internal Cooling (MQuIC) technology, for instance, uses tiny quantities of a cooling medium to reduce thermal wear on small, delicate parts during the machining process. Its MicroJet array can extend MQuIC's functionality to a wider range of manufactured components, and the recently developed QuickThick coating addresses abrasive wear with an extra-thick substrate coating. All three technologies, and several others that remain in the early stages of development, could dramatically extend the working lifespans of high-performance components and finished products alike.

The Keweenaw Is Open for Business
Robust as it is, Houghton-Hancock's technology economy doesn't exist in a vacuum. Local business leaders recognize the need to attract new blood to the region in the form of established firms eager to exploit the Copper Country's native talent and infrastructure. The ongoing construction of a major manufacturing facility for Poland-based DA Glass's U.S. subsidiary counts as a big win for the region, but is there room for even bigger companies to grow here?

In a word, yes. SmartZone's "Fortune 500 model" has enticed a handful of big-name conglomerates--including Ford and GE's aviation division--to open satellite offices or outsourcing centers, mostly in partnership with Michigan Tech, around Houghton-Hancock. Jackson, Michigan-based insurer Jackson Life, for instance, rents space from SmartZone for its humming IT center. All told, the space employs about 30 Tech students as computer programming interns who work on various projects.

In effect, says Melchiori, Jackson Life gets to "try before it buys." Its IT temps are basically interviewing for permanent jobs with the company and performing much-needed work for it in the process. Meanwhile, the interns get a taste of what working for a big insurance company might be like; even if they opt not to take longer-term positions, they gain valuable experience they can put to use wherever they land.

So what's next for the Copper Country? More of the same, hopefully. DA Glass's investment wouldn't have been possible without practical support and material assistance from the Keweenaw Economic Development Agency, and it's doubtful that firms like GS Engineering, LTG and Endres would be where they are today without the SmartZone incubator. In the future, SmartZone's SmartStart program will play a crucial role in guiding and focusing innovators' limited resources on new technologies and processes that actually solve problems. 

Here's to hoping the Copper Country's next decade is as productive as its last.

Brian Martucci writes about business, finance, food, drink and anything else that catches his fancy. When he's not working out of his office on Marquette's East Side, you can find him stretching his legs on the trails or sampling local flavors at Blackrocks and the Ore Dock.

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